Assertion of Standards-Essential Patents by Non-Practicing Entities in Europe

Jorge Contreras, Brian Love, Christian Helmers & Fabian Gaessler, “Assertion of Standards-Essential Patents by Non-Practicing Entities in Europe”

Standard-setting organizations (SSOs) often require their participants to license patents essential to the implementation of standardized product (standards-essential patents or SEPs) on terms that are fair, reasonable and non-discriminatory (FRAND). The European Commission, in its investigations of Samsung, Google and others, has expressed concern regarding the assertion of SEPs as to which FRAND commitments have been made. More recently, European Court of Justice decision in Huawei v. ZTE imposed significant limitations on the ability of the holder of a SEP to seek an injunction preventing the sale of standardized products by a willing licensee. An extensive literature now exists regarding FRAND commitments and their enforcement, both in North America and Europe.

Yet the vast majority of this literature is focused largely on participants in the standard-setting process and disregards non-practicing entities (NPEs) and other SSO “outsiders” that may hold and assert SEPs. This omission could be significant, as the degree to which NPEs are bound by FRAND and other commitments made within SSOs is unclear. Understanding the degree and nature of NPE SEP holdings and assertions would improve overall understanding of the potential impact of regulatory policies and judicial decisions on SEP litigation and technical standard-setting more broadly.
In 2015, Contreras conducted the first study of SEP assertion by SSO outsiders in U.S. district courts. This study focused on seven widely-adopted ICT standards, including standards subject to FRAND and royalty-free licensing commitments. It found that NPEs initiated a significant majority of all SEP assertions in U.S. courts relating to these standards.

But it is well-known that NPE patent assertions are not only a U.S. phenomenon, and that NPEs have become increasingly active in Europe. In 2015, Love, Helmers, Ernicke and Gaessler for the first time quantified NPE patent litigation in Germany and the UK. They found that NPEs account for around 10% of patent suits filed in these two jurisdictions.
The current study builds on these two strains of prior work by analyzing the assertion of SEPs by NPEs in Europe, and comparing the trends and modalities of this litigation with that in the U.S. We conclude with a discussion of the implications of these findings for current debates regarding FRAND licensing and SSO policy limitations, particularly regulatory and competition law proposals regarding the assertion of SEPs.Standard-setting organizations (SSOs) often require their participants to license patents essential to the implementation of standardized product (standards-essential patents or SEPs) on terms that are fair, reasonable and non-discriminatory (FRAND).  The European Commission, in its investigations of Samsung, Google and others, has expressed concern regarding the assertion of SEPs as to which FRAND commitments have been made. The current study builds on prior work by analyzing the assertion of SEPs by NPEs in Europe, and comparing the trends and modalities of this litigation with that in the U.S. We conclude with a discussion of the implications of these findings for current debates regarding FRAND licensing and SSO policy limitations, particularly regulatory and competition law proposals regarding the assertion of SEPs.